05.04.2026 06:03

According to the CME Fedwatch tool, futures markets assign a 99.5% likelihood that the Federal Open Market Committee will maintain its benchmark rate at 3.50%‑3.75% during the April 29 meeting.
Just one month earlier, on March 4, analysts had placed an 88.2% probability on a hold, while roughly 12% still anticipated a cut to the 325‑350 basis‑point range; those expectations have now vanished.
This rapid shift follows President Donald Trump’s prime‑time address, in which he warned of “extremely hard” retaliation against Iran, threatened strikes on power plants, and downplayed U.S. dependence on the Strait of Hormuz.
The market reaction was swift: West Texas Intermediate crude surged past $110 per barrel, climbing to $112, while Brent settled above $107, levels not seen consistently since the 2022 Russia‑Ukraine shock.
Physical oil premiums in Houston rose to a $5.50 premium over futures contracts, underscoring tight supply conditions.
Since late February 2026, Iran’s naval activities have effectively throttled tanker traffic through the Strait, a chokepoint that carries about 20% of global oil exports daily.
In response, the International Energy Agency coordinated emergency stock releases from more than 30 countries, cushioning but not fully eliminating the shortfall; the resulting scarcity feeds directly into the Fed’s preferred inflation gauge.
The March 18 Summary of Economic Projections consequently lifted the 2026 Personal Consumption Expenditures inflation forecast to 2.7%, up from the 2.4% projection issued in December, with core PCE also showing an upward trend. Overall, the convergence of geopolitical tension, supply constraints, and a firming monetary stance has led market participants to price in a prolonged period of rate stability, with the next pivotal test slated for June 17, when forecasts place a 96.7% chance on another hold.
Internet sources consistently highlight that the Fed’s current stance reflects both fiscal caution and an environment shaped by volatile energy markets.